4 ms·

> large tech companies which is where the market wants to go Could you expand on that? Is there something inherent about the tech industry that makes large com

by n4r9 1y ago

> large tech companies which is where the market wants to go Could you expand on that? Is there something inherent about the tech industry that makes large companies desirable?

roenxi 1y ago
Imagine one actor in the tech space charges $/whatever which is slightly cheaper than the next nearest rival. Everyone flocks to that company and they become fabulously wealthy. Because of that effect the market tends to centralise. Another way to look at it is some company is the best at whatever, everyone wants to go with that company and it is technically possible for that company to serve everyone. So there is the same tendency for companies to get very large. Obviously oversimplifying, there are a lot of ways the tendency manifests. Metcalfe's law and all that. That applies less in the physical world because distance is a factor. If there is some hairdresser in Silicon Valley who does amazing haircuts I'm still not going to go there to get my hair done. But I'm happy to watch YouTube which is ultimately being coordinated from nearby to that hairdresser. The issue is, based on how things have actually played out, the EU is not the place to be if you're a hyper-efficient company serving a huge number of people with huge capital reserves. I assume the tax system is the root cause.
- n4r9 1y ago
  In other words it's more about whether the EU market is favourable relative to other markets?
  - roenxi 1y ago
    Not exactly. The general centralisation trend is a result of relative forces. The EU's suitability for a software ecosystem might be relative or absolute. It is like if one country bans encryption and another doesn't. Any company that relies on encryption will be in the other country, but even if there were no alternatives they still wouldn't be in the first. They've been banned. So the first is relatively unfavourable, but in an absolute sense the same companies just won't exist there. In the case of the EU, relative inferiority to the US in software makes the situation more extreme, but they probably couldn't maintain the same ecosystem even if they were the entire market. People get very excited about breaking up large companies, but as far as I can see there needs to be a behemoth like Google to fund Gmail and YouTube. The market price for something like Gmail is more like $5/mo unless there is an advertising giant involved who sells the data and can find ads buyers anywhere in the world. I don't think it is obvious that the EU would tolerate a home-grown Google.
    - n4r9 1y ago
      > The market price for something like Gmail is more like $5/mo Proton Mail has a largely similar feature set on the free tier, yet appears to generate steady profit from paid subscriptions.
      - roenxi 1y ago
        Their free tier is strictly inferior to Google's though, Gmail is 15GB storage free, proton is 15GB paid. Coincidentally that is the difference between me being able to use the service for free and not.
        n4r9 1y ago
        Wow! I've been using Gmail since it was in beta and I'm on less than 6GB. Do you get a lot of big attachments or something?
SiempreViernes 1y ago
The creation of a monopoly is always desirable for the company owners, so tech isn't unique in this respect. I think the main distinguishing feature is that big IT companies are new, so the bad outcomes of tech monopolies are only now being recognised and so competition authorities have been slow to act.
- gessha 1y ago
  Innovative monopolies are supposed to be temporary because IP and trade secrets only get you so far. They’re not supposed to be state-backed, sponsored and protected, at least not in a country with functional antitrust laws. The US is also exceptional in its capacity to flex its dollar muscles and enforce DMCA on other countries stifling innovation.

by n4r9 1y ago

> large tech companies which is where the market wants to go Could you expand on that? Is there something inherent about the tech industry that makes large companies desirable?

roenxi 1y ago

Imagine one actor in the tech space charges $/whatever which is slightly cheaper than the next nearest rival. Everyone flocks to that company and they become fabulously wealthy. Because of that effect the market tends to centralise. Another way to look at it is some company is the best at whatever, everyone wants to go with that company and it is technically possible for that company to serve everyone. So there is the same tendency for companies to get very large. Obviously oversimplifying, there are a lot of ways the tendency manifests. Metcalfe's law and all that. That applies less in the physical world because distance is a factor. If there is some hairdresser in Silicon Valley who does amazing haircuts I'm still not going to go there to get my hair done. But I'm happy to watch YouTube which is ultimately being coordinated from nearby to that hairdresser. The issue is, based on how things have actually played out, the EU is not the place to be if you're a hyper-efficient company serving a huge number of people with huge capital reserves. I assume the tax system is the root cause.

n4r9 1y ago
In other words it's more about whether the EU market is favourable relative to other markets?
- roenxi 1y ago
  Not exactly. The general centralisation trend is a result of relative forces. The EU's suitability for a software ecosystem might be relative or absolute. It is like if one country bans encryption and another doesn't. Any company that relies on encryption will be in the other country, but even if there were no alternatives they still wouldn't be in the first. They've been banned. So the first is relatively unfavourable, but in an absolute sense the same companies just won't exist there. In the case of the EU, relative inferiority to the US in software makes the situation more extreme, but they probably couldn't maintain the same ecosystem even if they were the entire market. People get very excited about breaking up large companies, but as far as I can see there needs to be a behemoth like Google to fund Gmail and YouTube. The market price for something like Gmail is more like $5/mo unless there is an advertising giant involved who sells the data and can find ads buyers anywhere in the world. I don't think it is obvious that the EU would tolerate a home-grown Google.
  - n4r9 1y ago
    > The market price for something like Gmail is more like $5/mo Proton Mail has a largely similar feature set on the free tier, yet appears to generate steady profit from paid subscriptions.
    - roenxi 1y ago
      Their free tier is strictly inferior to Google's though, Gmail is 15GB storage free, proton is 15GB paid. Coincidentally that is the difference between me being able to use the service for free and not.
      - n4r9 1y ago
        Wow! I've been using Gmail since it was in beta and I'm on less than 6GB. Do you get a lot of big attachments or something?

SiempreViernes 1y ago

The creation of a monopoly is always desirable for the company owners, so tech isn't unique in this respect. I think the main distinguishing feature is that big IT companies are new, so the bad outcomes of tech monopolies are only now being recognised and so competition authorities have been slow to act.

gessha 1y ago
Innovative monopolies are supposed to be temporary because IP and trade secrets only get you so far. They’re not supposed to be state-backed, sponsored and protected, at least not in a country with functional antitrust laws. The US is also exceptional in its capacity to flex its dollar muscles and enforce DMCA on other countries stifling innovation.